ECO 105 Chapter Notes - Chapter 5-7: Price Ceiling, Price Floor, Demand Curve
Document Summary
The price elasticity of demand: measures how much the quantity demanded responds to a change in price. Total revenue: he amount paid by buyers and received by sellers of a good. Income elasticity of demand: measures how the quantity demanded changed as consumer income changes. Cross price elasticity: measures how the quantity demanded of one good responds to a change in the price of another good. Price elasticity of supply: measures how much the quantity supplied responds to changes in the price. Demand for a good is said to be elastic if the quantity demanded responds substantially to changes in the price. Demand is said to be inelastic if the quantity demanded responds only slightly to changes in the price. Price elasticity = percent change in quantity demanded/ percent change in price. At points with a low price and high quantity the demand curve is inelastic. At points with a high price and low quantity the demand curve is elastic.